Australians warned that delivery fees must rise after Menulog closure

Australians may soon need to pay more for their delivery services, with price rises increasingly seen as the only viable way to save the industry.

On Wednesday, Menulog became the third delivery service app to close in Australia after nearly two decades in operation.

Transport Workers’ Union national secretary Michael Kaine warns that Australians may need to get used to higher costs, as the delivery service model is a race to the bottom.

“It is not helping any business to have a downward spiral because what it means is the margins of companies get smaller, the workers are getting less of a cut – even as they are paid below the minimum wage – and the restaurants themselves get squeezed,” he said.

“What we want to do is build an upward spiral and that might mean community members have to pay a little bit more when they press that button on their app and by magic there is a knock at the door.”

HungryPanda director of public affairs Kitty Lu told NewsWire that Wednesday’s announcement that Menulog was leaving Australia came at a “complete shock”.

“It highlights how challenging the entire industry has become, with higher operating costs and a global shift towards a more sustainable profitability rather than pure growth,” she said.

Ms Lu said the industry in Australia was now left with two giants and more specialised players such as HungryPanda, with its community focus allowing them to build a resilient and more sustainable product.

HungryPanda has not lifted prices and did not allude to prices needing to rise.

Despite the potential price rises, Mr Kaine said the trade-off could be worth it for most Australians.

“I think most Australians would be happy to pay a little more if the person delivering was earning the minimum wage, could look after themselves and their families and get workers compensation if something went wrong,” he said.

Mr Kaine said the gig economy was the “wild west” in Australia.

The unions claim standardising the industry would keep the gig economy viable while allowing businesses to compete on entrepreneurship and service standards.

“What we really need is a level playing field in this industry,” Mr Kaine said.

“What it will mean is that rather than companies being in this ongoing cutthroat fight where they challenge each other for market share by screwing down the amount they pay to workers and restaurants, there’ll be a level playing field.”

According to Mr Kaine, Menulog closing is another “warning shot” to the industry, as it is the latest in a long line of delivery service apps that have closed in recent years.

It could result in up to 10,000 Australians out of work, as fears grow the decision will have far-reaching consequences across the service industry.

“We think there are in excess 10,000 workers who have accessed work over time through the Menulog app and around 5000 people at any one time,” Mr Kaine said.

“So this is going to affect thousands and thousands of workers, as they will now have to find or further supplement income somewhere else, so it’s not an insignificant ripple through the economy.”

Ms Lu said platforms across the board had been working together to help improve safety standards.

“The people who will be most directly affected will be the delivery riders,” she said.

“As an industry, gig workers are largely part of a shared labour pool, including now where you might see a rider wearing a HungryPanda jacket but is delivering for another provider.

“We think many of these riders will soon be reabsorbed by other platforms as the market demand stabilises.”